DISARMAMENT: Hong Kong a Hub For ‘Controlled’ Technology Trade?

By IPS Correspondents Reprint | | Print |

Analysis - Yojana Sharma

HONG KONG, Jul 17 1996 (IPS) - A 910 kilogramme shipment of bomb parts originating in China and seized at Hong Kong’s international airport earlier this year highlights a growing problem of illegal technology shipments to and from the Mainland via Hong Kong.

Hong Kong’s Customs and Excise Department has revealed that cases of illegal transfer of “controlled” technology through the British Colony have more than doubled in the past two years.

Most of it is bound to or from China, although local officials believe that some is being transshipped here en route to South- east Asian nations.

“Controlled” or “strategic” technology goods usually refer to technology and chemicals that can be put to military use.

According to Hong Kong customs, there were more than 200 cases last year where companies were found to be importing or exporting “strategic commodities” without a licence. This compares with 115 cases in 1994 and 93 in 1993.

The issue has become a particularly sensitive one since the demise in 1994 of the Coordinating Committee for Multilateral Export Controls (COCOM) which was set up in 1949 to prevent communist countries including China from acquiring Western technology with military application.

COCOM was replaced last year by a new trade control agreement between the West and former East Bloc countries which specifically targets so-called pariah states such as Iran, Iraq, Libya and North Korea.

Dubbed the “New Forum” it does not include China, leaving Beijing technically free to re-export Western technology to these states.

Units of the People’s Liberation Army (PLA) have been able to import sensitive technology under the guise that it is for civilian use and part of the PLA’s bid to convert its military- industrial complex to civilian production, according to Hong Kong- based analyst Tai Ming Cheung.

The control by the PLA of many high-technology sectors in China, including telecommunications — the PLA controls radio frequencies used by mobile telephone users — “means that the line between civilian and military technology is blurred”, says another Hong Kong-based China analyst.

“In Hong Kong, businessmen do not even worry about the distinction,” he said. “Business with China usually means business with the PLA.”

This is borne out by a deal reported in the Hong Kong Press earlier this year, between the PLA and Hong Kong’s Hutchinson Whampoa conglomerate to develop the mainland telecommunications market.

At present, U.S. technology can be exported to Hong Kong if a licence is applied for, though companies have noted that receiving licences can become a drawn-out affair when tensions between the United States and China are high such as over Beijing’s exports of missile technology to Pakistan when Washington was contemplating sanctions.

The bottom line however, one representative of a U.S. technology company in Hong Kong told IPS, is that Washington has not yet begun to think about the dangers of China using Hong Kong as a conduit after 1997.

“It is already happening clandestinely now. And from reports we are hearing, China cannot be considered reliable in sticking to its word in not channeling technologies to military use,” he said.

Last year, a row broke out between Washington and Beijing when the U.S. aircraft manufacturer McDonnell Douglas discovered that China had violated the terms under which it was sold equipment intended for a civilian aircraft parts factory.

Instead some of the machines ended up in a factory that manufactures Chinese silkworm missiles.

Another case last year involved sales of sensitive U.S. telecommunications technology to a Guangdong-based company backed by the PLA.

Analysts say many Mainland Chinese businesses requiring access to foreign technology, have since 1989 when the West imposed strict military sanctions against Beijing, set up branches and shell companies in Hong Kong as a way of getting round strict import licensing controls.

On the official front, Beijing’s cabinet level State Science and Technology Commission has been studying ways to promote “technology exchange” between Hong Kong and China after the handover of the British Colony to Chinese rule on Jun. 30, 1997.

“Either Hong Kong will have to be subject to the same controls as China, which U.S. businesses in Hong Kong oppose because they serve the whole Asian region, or the West will have to turn a blind eye to the porous Hong Kong-China border after 1997,” said one Hong Kong businessman, adding there is no indication that the issue is being tackled with any urgency.